Saudi Arabia Signs MoU with IMF to Establish Regional Office in Riyadh

Saudi Minister of Finance Mohammed al-Jadaan with IMF Managing Director Kristalina Georgieva during the Financial and Economic Cooperation Committee of the GCC. (Asharq Al-Awsat)
Saudi Minister of Finance Mohammed al-Jadaan with IMF Managing Director Kristalina Georgieva during the Financial and Economic Cooperation Committee of the GCC. (Asharq Al-Awsat)
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Saudi Arabia Signs MoU with IMF to Establish Regional Office in Riyadh

Saudi Minister of Finance Mohammed al-Jadaan with IMF Managing Director Kristalina Georgieva during the Financial and Economic Cooperation Committee of the GCC. (Asharq Al-Awsat)
Saudi Minister of Finance Mohammed al-Jadaan with IMF Managing Director Kristalina Georgieva during the Financial and Economic Cooperation Committee of the GCC. (Asharq Al-Awsat)

Saudi Arabia concluded a memorandum of understanding with the International Monetary Fund (IMF) to establish a regional office in Riyadh, which would boost its presence in the region and provide its economic recommendations to the countries of the Gulf and the region.

Saudi Minister of Finance Mohammed al-Jadaan signed the MoU with IMF Managing Director Kristalina Georgieva in Riyadh. A number of Gulf finance ministers and officials were present at the event.

Jadaan said Gulf countries had significantly benefited from support for capacity development, and necessary reforms are currently being implemented in light of the challenging global environment.

He reiterated Saudi Arabia's keenness, along with the Gulf countries, to address food insecurity and work together to eliminate the crisis, adding that establishing a regional office in Riyadh strengthens relations.

"We are taking our cooperation to a new level by establishing an IMF regional office in Riyadh. It will spearhead engagement with regional institutions, strengthen relationships with country authorities, and help expand the IMF's capacity development activities—which will make it one of the largest contributors globally," Georgieva said.

Food security

Georgieva said her meeting with Saudi ministers tackled global issues and was instrumental in further deepening the cooperation between the IMF and Saudi Arabia, as well as other Gulf states, especially in responding to the global series of shocks, including food insecurity.

She expected that the GCC countries would achieve a growth rate of 6.5 percent, compared to 2.6 percent last year, and the momentum of economic growth in the Gulf region would continue.

She added that the recent meeting with the Gulf ministers focused on the importance of achieving sustainability, diversifying sources of income, and weighing the aid needs of other countries.

The official believes that the MoU with Saudi Arabia will further increase opportunities for cooperation, investing, and supporting the region given the Fund's experience, setting policies to reduce economic restrictions, and providing Arabic training for employees and individuals in government entities.

Georgieva stressed that Saudi Arabia will become one of the fastest growing economies in the world, noting that maintaining the reform momentum to diversify the economy further will be pivotal for longer-term prosperity.

She said she was grateful for the Arab Coordination Group's recent announcement to provide an initial $10 billion to alleviate the global food supply crisis and is extremely pleased that several GCC countries are planning to make further pledges soon.

Economic integration

Meanwhile, the Financial and Economic Cooperation Committee of the Gulf Cooperation Council (GCC) held its 117th meeting on Monday in Riyadh.

The meeting was chaired by the Saudi Finance Minister, chairman of the current session, with the participation of the GCC finance ministers, GCC Secretary-General Nayef al-Hajraf, and several senior officials and specialists.

Jadaan stressed that GCC leaders are keen to reach the highest levels of economic integration, stressing the importance of implementing the requirements of the Gulf common market, for the benefit of the citizen.

He warned that the economies of the GCC countries were not immune from the effects of the economic crises the world is going through.

GCC countries, however, were keen to confront these crises proactively, he remarked, noting that their quick action to address their repercussions helped contain their impact within a short period.

High growth rates

He added: "As a result, the GCC countries continued to maintain development and achieve high economic growth rates, despite the IMF's lowering of its expectations for the performance of the global economy during the current and next two years."

This gives promising opportunities to bolster economic integration and continue efforts to achieve the goal of attaining Gulf economic unity, he explained.

The world's challenges and difficulties are still present and ongoing, cautioned Jadaan, adding that this requires everyone to intensify efforts and cooperation to preserve the gains and overcome the challenges.

Market turmoil

Following the end of the committee meeting, the joint session of the finance ministers and central bank governors of the GCC countries was held with the IMF Managing Director.

Jadaan remarked that the global economy was severely affected by the COVID-19 pandemic and recovered strongly in 2021.

However, he said it is now facing significant headwinds while the pandemic impact remains, supply bottlenecks persist, and energy and food markets are in turmoil, with inflation rising to its highest levels in several years.

The meeting addressed several financial and monetary issues and discussed the IMF's paper, "Economic Prospects and Policy Challenges for the GCC Countries," which focused on policies necessary for GCC countries to alleviate the repercussions of the pandemic and oil prices.

They also tackled the significance of focusing on policies to ensure financial sustainability, such as non-oil revenues, increasing investments in renewable energy resources, and the importance of structural reforms to boost private sector-led growth and provide job opportunities.



Saudi Aramco CEO Says Phasing out of Fossil Fuels Is a ‘Fantasy’ 

Saudi Aramco CEO Amin Nasser speaks at the CERAWeek conference in Houston. (X platform)
Saudi Aramco CEO Amin Nasser speaks at the CERAWeek conference in Houston. (X platform)
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Saudi Aramco CEO Says Phasing out of Fossil Fuels Is a ‘Fantasy’ 

Saudi Aramco CEO Amin Nasser speaks at the CERAWeek conference in Houston. (X platform)
Saudi Aramco CEO Amin Nasser speaks at the CERAWeek conference in Houston. (X platform)

Saudi Aramco CEO Amin Nasser said on Monday global oil demand will not peak for some time, so policy makers need to ensure sufficient investment in oil and gas to meet consumption and abandon the fantasy of phasing out fossil fuels.

In remarks to oil and gas executives at the CERAWeek conference in Houston, he added that despite growing investment, alternative energy has yet to displace hydrocarbons at scale.

"All this strengthens the view that peak oil and gas is unlikely for some time to come, let alone 2030," he said.

Oil demand will reach a new record of 104 million barrels per day (bpd) in 2024, Nasser remarked.

Moreover, he stated that shipping disruption in the Red Sea due to attacks by Yemen's Houthi militias had "made a tight situation tighter" in shipping markets.

He added, however, that the attacks had minimal impact on Saudi oil exports. Aramco remained resilient, aided by its strategic infrastructure, including the East-West pipeline.

He reiterated Aramco’s substantial spare capacity of 3 million bpd, reaffirming the company’s readiness to address any unforeseen disruptions in global oil supply.


Iraq to Reduce Its Crude Exports to 3.3 Million Barrels a Day 

An aerial view shows Majnoon oil field near Basra, Iraq, May 12, 2023. (Reuters)
An aerial view shows Majnoon oil field near Basra, Iraq, May 12, 2023. (Reuters)
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Iraq to Reduce Its Crude Exports to 3.3 Million Barrels a Day 

An aerial view shows Majnoon oil field near Basra, Iraq, May 12, 2023. (Reuters)
An aerial view shows Majnoon oil field near Basra, Iraq, May 12, 2023. (Reuters)

Iraq will reduce its crude exports to 3.3 million barrels a day (bpd) in the coming months to compensate for exceeding its OPEC+ quota since January, the oil ministry said on Monday.

OPEC's second-largest producer Iraq pumped significantly more in January and February than an output target established in January when several members of the Organization of the Petroleum Exporting Countries and allies (OPEC+), including Iraq, agreed to support the oil market.

Iraq's oil ministry said in a statement on Monday it was committed to voluntary cuts agreed with OPEC+, which limit it to producing 4 million bpd.

Iraq exported an average 3.43 million bpd in February, the oil ministry said earlier this month, meaning Monday's pledge amounts to a cut of 130,000 bpd from last month's rate.


World Bank Group to Provide Egypt with $6 Bln over Three Years

People buy fruits and vegetables at a local market in Cairo, Egypt, 12 March 2024. (EPA)
People buy fruits and vegetables at a local market in Cairo, Egypt, 12 March 2024. (EPA)
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World Bank Group to Provide Egypt with $6 Bln over Three Years

People buy fruits and vegetables at a local market in Cairo, Egypt, 12 March 2024. (EPA)
People buy fruits and vegetables at a local market in Cairo, Egypt, 12 March 2024. (EPA)

The World Bank Group said on Monday it intends to provide more than $6 billion of support over the coming three years to Egypt, which has been struggling with a foreign currency crunch and gaping budget and balance of payments deficits.

The World Bank Group said $3 billion will go towards government programs and $3 billion to the private sector, all subject to the group's board approval.

The announcement follows Egypt's signing on March 6 of a loan agreement with the International Monetary Fund that expanded IMF support to Egypt by $5 billion and by an announcement on Sunday of $8.1 billion euros in financing from the European Union.

Egypt's central bank on March 6 let the pound plummet and said it would allow the currency to trade freely. The currency had been fixed against the dollar for 12 months.

Some $3 billion of the World Bank financing will be distributed to the government and its programs over three years, with the first $1 billion expected to arrive by the end of June, Egypt country director Stephane Guimbert told Reuters.

"Some significant part of that will go to budget support. and then we have a range of programs on climate, on SMEs (small and medium-sized enterprises), etc.," Guimbert said.

Another $3 billion will be directed through the World Bank Group's private sector arm, the International Finance Corporation (IFC), including through equity and loans, and will be made up partly by funds mobilized from other investors.

The financing is still subject to the group's board approval, which is expected before the end of June, Guimbert said. "And then we’ll disburse as soon as we can after that."

The World Bank program will focus in part on helping state-owned enterprises "that are not sold, that remain within government control, and the way they are managed, including levelling the playing field with the private sector", he said.

The World Bank funds will also help finance Egypt's social protection project, Takafol and Karama, as well as water and agriculture programs.

Egypt has been selling assets to boost the private sector and raise scarce hard currency, setting a target in 2022 to raise $10 billion annually over four years through private investment in state assets.

Egypt last month raised $35 billion by selling the development rights of the Ras al-Hikma peninsula on the Mediterranean coast to the Emirati sovereign wealth fund ADQ.

The World Bank Group said its current operational portfolio in Egypt is more than $8 billion, comprising $6 billion from the International Bank for Reconstruction and Development, $1.9 billion from the IFC and $0.5 billion from the Multilateral Investment Guarantee Agency.


IAEA to Help Iraq Develop Peaceful Nuclear Program, Agency Head Says 

Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi attends a press briefing at the Foreign Press Center in Tokyo, Japan, 14 March 2024, after inspecting decommissioning work and the releasing of treated radioactive water at Tokyo Electric Power Company (TEPCO)'s Fukushima Daiichi Nuclear Power Plant in Okuma, Fukushima Prefecture. (EPA)
Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi attends a press briefing at the Foreign Press Center in Tokyo, Japan, 14 March 2024, after inspecting decommissioning work and the releasing of treated radioactive water at Tokyo Electric Power Company (TEPCO)'s Fukushima Daiichi Nuclear Power Plant in Okuma, Fukushima Prefecture. (EPA)
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IAEA to Help Iraq Develop Peaceful Nuclear Program, Agency Head Says 

Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi attends a press briefing at the Foreign Press Center in Tokyo, Japan, 14 March 2024, after inspecting decommissioning work and the releasing of treated radioactive water at Tokyo Electric Power Company (TEPCO)'s Fukushima Daiichi Nuclear Power Plant in Okuma, Fukushima Prefecture. (EPA)
Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi attends a press briefing at the Foreign Press Center in Tokyo, Japan, 14 March 2024, after inspecting decommissioning work and the releasing of treated radioactive water at Tokyo Electric Power Company (TEPCO)'s Fukushima Daiichi Nuclear Power Plant in Okuma, Fukushima Prefecture. (EPA)

The head of the International Atomic Energy Agency Rafael Grossi met Iraq's prime minister in Baghdad on Monday as part of a visit to help the country develop a peaceful nuclear program.

"We have discussed several projects in Iraq, including building a nuclear reactor for peaceful purposes," Iraqi Education Minister Naim al-Aboudi told reporters following a meeting between Grossi and Iraqi Prime Minister Mohammed Shia al-Sudani.

Grossi said that a team of Iraqi experts would visit the agency's headquarters in Vienna in a few days to hold meetings to "set out a road map for the Iraqi peaceful nuclear program" amid growing interest in nuclear energy in the region.

"We see that in the (United Arab) Emirates, we see that in Egypt ... and of course we should see it here in Iraq," Grossi told reporters.

Iraq in the past had three nuclear reactors in Tuwaitha, its main nuclear research site, south of Baghdad. One was destroyed by an Israeli air raid in 1981 and the two others by US warplanes in the 1991 Gulf war that followed Iraq's 1990 invasion of Kuwait.

"Definitely, turning the page on this complex past is of the essence and we're doing just that," Grossi said.


Palestinian Unemployment Rate Seen Spiking to Over 50% Amid Gaza Conflict, ILO Says 

People walk in Gaza, amid the ongoing conflict between Israel and the Palestinian group Hamas, as seen from Israel, March 17, 2024. (Reuters)
People walk in Gaza, amid the ongoing conflict between Israel and the Palestinian group Hamas, as seen from Israel, March 17, 2024. (Reuters)
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Palestinian Unemployment Rate Seen Spiking to Over 50% Amid Gaza Conflict, ILO Says 

People walk in Gaza, amid the ongoing conflict between Israel and the Palestinian group Hamas, as seen from Israel, March 17, 2024. (Reuters)
People walk in Gaza, amid the ongoing conflict between Israel and the Palestinian group Hamas, as seen from Israel, March 17, 2024. (Reuters)

The Israel-Palestinian conflict is seen pushing the rate of Palestinian unemployment in the occupied West Bank and Gaza to above 50%, the International Labour Organization said on Monday.

Already more than half a million jobs have been lost since Oct. 7 2023, when Israel began a retaliatory military campaign in Gaza after Hamas militants launched deadly cross-border attacks, the new report showed. If the conflict continues until end-March then the unemployment rate will soar to 57%, it said.

ILO Regional Director for Arab States Ruba Jaradat said that the destruction of infrastructure and schools, hospitals and business in Gaza had "decimated entire economic sectors and paralyzed labor market activity, with untold repercussions on the lives and livelihoods of Palestinians for generations to come."

In Gaza, some 200,000 jobs have been lost, accounting for about two-thirds of total employment in the enclave.

In the West Bank, the report described "near lockdown" conditions with more than 650 permanent and temporary checkpoints across the territory having significant negative effects on the economy. More than 300,000 jobs, or about a third of total employment, have already been lost there, it said.


Economic Growth Boosts Role of Finance Companies in Saudi Arabia

The personal financing category topped the list with a significant increase of 666% (Asharq Al-Awsat)
The personal financing category topped the list with a significant increase of 666% (Asharq Al-Awsat)
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Economic Growth Boosts Role of Finance Companies in Saudi Arabia

The personal financing category topped the list with a significant increase of 666% (Asharq Al-Awsat)
The personal financing category topped the list with a significant increase of 666% (Asharq Al-Awsat)

Saudi Arabia's efforts to boost its economy and encourage local investments have led to a significant rise in loans provided by finance companies, reaching the highest levels in almost four years.

These loans increased by 73% to SAR 84.9 billion ($22.6 billion) by the end of 2023, compared to SAR 49.3 billion ($13.1 billion) in 2019.

Real estate financing took the largest share at 28%, while personal financing saw a massive increase of over 666%.

Finance companies, different from banks, specialize in providing loans and credit services to individuals and businesses. They aim to finance purchase and sale transactions for goods and services, often charging higher interest rates than banks to make profits.

These companies play a crucial role in providing financial solutions to individuals and businesses facing money problems.

By the end of 2023, Saudi Arabia had 59 licensed finance companies, with total assets of SAR65.5 billion, up by 68% from 2019.

According to data from the Central Bank of Saudi Arabia (SAMA), the capital of these companies increased by 25% to 15.4 billion Saudi riyals during the same period.

Mohammed Al-Faraj, Chief Asset Management Officer at Arbah Capital, explained to Asharq Al-Awsat that the lending surge was driven by Saudi Arabia’s strong economic growth, leading to increased demand for financing from individuals and businesses.

Loans from finance companies have positively impacted the economy by increasing investment, creating jobs, and boosting consumption, added Al-Faraj.

The finance sector enjoys high liquidity, with non-performing loans accounting for only 5% of total loans by the end of 2023.

Al-Faraj expected this trend to continue due to robust economic growth.

He also anticipated continued growth in the finance sector, with net income reaching SAR 1.6 billion by the end of 2023, up by 20% from 2019. Additionally, he predicted increased competition as finance companies expand their services and new players enter the market.

Ibrahim Al-Nwaibet, CEO of KASB Capital, pointed to the Kingdom’s real estate financing developments as the reason for the increase.

Residential financing hit SAR23.1 billion by 2023-end, making up 28% of total financing. However, he foresaw real estate finance companies moving away from the sector toward corporate and other activities.

At the start of this year, the National Housing Company, part of the Ministry of Municipal and Rural Affairs and Housing, announced a reduced financing margin for residential projects in suburbs and urban areas.

This move, in collaboration with four local banks, aimed to benefit the first 10,000 sales contracts without setting salary limits.


Oil Mergers, Clean Fuels Vie for Attention at Houston Energy Conference

FILE PHOTO: Mike Wirth, the CEO of Chevron Corporation, speaks with Daniel Yergin, the vice chairman of S&P Global, as top energy executives and officials from around the world gather during the CERAWeek 2023 by S&P Global, energy conference in Houston, Texas, US, March 6, 2023. REUTERS/Callaghan O'Hare/File Photo
FILE PHOTO: Mike Wirth, the CEO of Chevron Corporation, speaks with Daniel Yergin, the vice chairman of S&P Global, as top energy executives and officials from around the world gather during the CERAWeek 2023 by S&P Global, energy conference in Houston, Texas, US, March 6, 2023. REUTERS/Callaghan O'Hare/File Photo
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Oil Mergers, Clean Fuels Vie for Attention at Houston Energy Conference

FILE PHOTO: Mike Wirth, the CEO of Chevron Corporation, speaks with Daniel Yergin, the vice chairman of S&P Global, as top energy executives and officials from around the world gather during the CERAWeek 2023 by S&P Global, energy conference in Houston, Texas, US, March 6, 2023. REUTERS/Callaghan O'Hare/File Photo
FILE PHOTO: Mike Wirth, the CEO of Chevron Corporation, speaks with Daniel Yergin, the vice chairman of S&P Global, as top energy executives and officials from around the world gather during the CERAWeek 2023 by S&P Global, energy conference in Houston, Texas, US, March 6, 2023. REUTERS/Callaghan O'Hare/File Photo

Top oil executives and ministers descend on Houston this week for one of the world's biggest energy conferences emboldened by blockbuster mergers, stable oil prices and less pressure for a large scale move to clean fuels.

Global oil prices have remained in a range between $75 and $85 per barrel, a level fueling profits but not hurting economic growth, despite war in Eastern Europe and turmoil in the Middle East. Stock markets continue to spur deals, making Big Oil even bigger.
The annual CERAWeek conference comes as demand for oil and gas continues to rise alongside solar, wind and biofuels. Energy markets have accommodated a reordering of global flows as customers turn more to regional energy suppliers or live with longer seaborne supply chains.
"A remarkable thing is the (price) stability, given the geopolitical turmoil," said Daniel Yergin, vice chairman of conference organizer S&P Global and a Pulitzer Prize-winning author on global energy.
Unlike past conferences where conversations were dominated by market-share battles between USshale oil producers and the Organization of the Petroleum Exporting Countries, talk of price wars have been supplanted by energy security issues, Yergin said, according to Reuters.
"When demand was down and prices were down, it was very easy to see a way towards energy transition, but with Russia/Ukraine (war) and price shocks, energy security is back on the table," Yergin added.
More than 7,200 people are expected to hear the latest outlook on energy markets from the heads of top producers.
Global liquefied natural gas (LNG) developments and US climate policies will be a major topic in separate sessions by big exporters Cheniere Energy and Venture Global LNG, while US Energy Secretary Jennifer Granholm and White House adviser John Podesta press the administration's climate goals.
While oil prices are strong, natural gas has been overwhelmed by a production glut. But "this year will be a transition year to a much more bullish gas and power market next year," said Vikas Dwivedi, an energy strategist at financial firm Macquarie Group.

Climate concerns are reflected in the conference sessions on carbon sequestration technology and hydrogen fuels, which have become two of the oil industry's favorite means of addressing global warming. The role of artificial intelligence in energy production and carbon emissions are prominent sessions this year.


Gold Slips as Dollar Firms, Cenbank Meetings in Focus

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Slips as Dollar Firms, Cenbank Meetings in Focus

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices slipped on Monday as the dollar held firm and investors braced for a slew of policy decisions from major global central banks including the US Federal Reserve this week.
Spot gold was down 0.4% to $2,147.79 per ounce, as of 0534 GMT. US gold futures fell 0.5% to $2,150.40, Reuters reported.
"A fairly hawkish outcome from the Fed has been baked in... it shows a fairly strong consensus that there might only be one or two cuts this year," said Kyle Rodda, a financial market analyst at Capital.com.
The Fed is considered certain to keep rates at 5.25%-5.5% at the end of its two-day meeting on Wednesday. But there is a possibility that the Fed might signal a higher-for-longer outlook on policy given the stickiness of inflation at both a consumer and producer level.
Traders are now pricing in an about 56% chance of a rate cut in June. Higher interest rates reduce the appeal of holding non-yielding gold.
Last week, data showed that US consumer prices increased solidly in February and producer prices rose more than expected amid a surge in the cost of goods like gasoline and food.
"If we get a less hawkish outcome from the Fed, there's every reason that we will see a weaker dollar, lower yields, and that could just fuel a rally and provide some fundamental impetus and then you are looking at $2,200 levels," said Rodda.
The dollar held steady near a two-week high against its rivals, making gold more expensive for other currency holders.
Meanwhile, the Bank of Japan is expected to exit its ultra-dovish monetary policy at its two-day meeting ending on Tuesday. The Bank of England will hold its meeting on Thursday and is expected to stay put on rates.
Spot silver dipped 0.6% to $25.01, platinum fell 0.6% to $927.63 per ounce and palladium lost 0.6% to $1,071.01.


Ukraine's GDP up by 3.6% in January-February, Economy Minister Says

 People look at Kyiv's panorama from a park in central Kyiv on March 15, 2024, amid the Russian invasion of Ukraine. (AFP)
People look at Kyiv's panorama from a park in central Kyiv on March 15, 2024, amid the Russian invasion of Ukraine. (AFP)
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Ukraine's GDP up by 3.6% in January-February, Economy Minister Says

 People look at Kyiv's panorama from a park in central Kyiv on March 15, 2024, amid the Russian invasion of Ukraine. (AFP)
People look at Kyiv's panorama from a park in central Kyiv on March 15, 2024, amid the Russian invasion of Ukraine. (AFP)

Ukraine's gross domestic product rose 3.6% in the first two months of this year, and growth is expected to continue in the first quarter, the economy minister Yulia Svyrydenko said on Sunday.

"This was driven by several factors, including investment demand, favorable weather conditions for construction works, agricultural exports, (and) the operation of the Ukrainian sea corridor," Svyrydenko said on Facebook, citing preliminary data.

She said the expansion of production capacity in the mining industry and stability in the energy sector were additional factors.

"Thanks to the positive performance of key sectors of the economy, we expect sustainable growth for the entire first quarter," she added.

Ukraine's GDP rose 3.5% in January, having grown by 5% in 2023 after a 28.8% fall in the previous year.

Ukraine's economy was devastated by Russia's invasion in February 2022 as millions fled the war, cities and infrastructure were bombed, and logistics, supply chains and exports disrupted.


Standard and Poor’s Affirms Saudi Arabia 'A/A-1' Rating, Outlook Stable

A general view of Riyadh, Saudi Arabia. (SPA file photo)
A general view of Riyadh, Saudi Arabia. (SPA file photo)
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Standard and Poor’s Affirms Saudi Arabia 'A/A-1' Rating, Outlook Stable

A general view of Riyadh, Saudi Arabia. (SPA file photo)
A general view of Riyadh, Saudi Arabia. (SPA file photo)

Standard and Poor’s Global Ratings affirmed its “A/A-1” long- and short-term foreign and local currency unsolicited sovereign credit ratings on Saudi Arabia with a stable outlook.

“The stable outlook reflects that we expect the government's wide-ranging reforms will continue to underpin the development of the non-oil sector and support non-oil growth and fiscal receipts,” said S&P on Friday.

“This is balanced against the cyclicality of a still hydrocarbon-focused economy, and fiscal pressures tied to the country's transformation plan and expanding population.”

“Saudi Arabia has embarked on a significant, rapid economic and social transformation program under the Vision 2030. In the leadup to 2030, we expect to see an acceleration of investment projects that seek to establish new industries, such as tourism, and diversify the economy away from its primary reliance on the upstream hydrocarbon sector,” it added.

“Over the long term, we anticipate that Vision 2030 projects will bear fruit by creating a more diversified economy and revenue base, jobs for a young population, and broader workforce participation,” it stressed.

Moreover, it noted: “Large hydrocarbon reserves and low cost of production provide Saudi Arabia some resilience to a global energy transition to low-carbon alternatives, especially in a future scenario where fossil fuel demand will largely be met by a smaller number of the most efficient producers.”